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A New Criminal Industry Is Growing in Texas Oilfields

Mose Buchele for KUT News
Former police officer Mike Peters now works security for oil producers. He watches out for signs of oil laundering.

Cattle rustlers have been both reviled and mythologized in Texas since there was cattle on the range. Now, the downturn in oil prices may be giving rise to a new kind of criminal in South Texas: oil rustlers.

In the oilfields in the brush country of South Texas, former San Antonio Police Officer Mike Peters turned to me from the driver’s seat of his pickup. "Let’s play cop for just a little while,” he said. Peters was on the force for more than 30 years. He knows how to "play cop," and, after Peters retired from the police, he became Head of Security for the drilling company Lewis Energy

“You notice the truck that was here when we pulled out? I don’t know the truck… it’s not one of ours," he said. "[I'm] wondering what they’re up to.” 

The truck in question seemed to be trying to enter an oil well site, which caught Peters' attention.

“More than likely he’s purely legitimate. But, if you don’t question when you see something like that, you don’t ever catch anybody.”

These days he’s trying to catch oil thieves. He said guys sneaking into well sites and literally stealing the crude oil is becoming a big problem. But, why would anyone want to steal oil when prices are so low? A visit to the nearby town of Cotulla provides some insight. 

Credit Mose Buchele/KUT
Ysmael Telles is an unemployed former oilfield worker. He says some workers take up odd jobs to make ends meet.

In the town plaza, cars line up for an outdoor food pantry. Volunteers say the need has been strong since oilfield-related unemployment took hold. Hanging out in the plaza, former oilfield worker Ysmael Telles put it simply.

“Gas goes up, the oilfield goes up. Gas goes down, and you go back to the house," Telles said.

Telles has been unemployed for a couple of years. He said these days a lot of men need to get creative to make ends meet.

"They have to pay for insurance for their cars. They have to pay for this and that. They have to create their own jobs: cut grass, lawn mowers, weed-eating," he said.

Some might even take to stealing.

LaSalle County Sheriff Miguel Rodriguez says that since the downturn, he's investigated stolen generators, stolen truck batteries and stolen oil.

“It’s all about the money," Rodriguez said. "It’s always about the green dollar.” 

And crimes against oil companies, he says, are almost always inside jobs. 

“You got people who they hired to work, and for some reason they get terminated – they get fired," he explained. "And they know the system, so they go to the location where they know there’s the oil, and they sell it on the black market.” 

So just how does it work?

Though oil prices are low, oil theft is a rising problem in the fields. Some unemployed or underemployed oil workers have turned to selling oil on the black market.

In a police impound lot in Cotulla sits a truck that was used in an alleged oil heist last November. It’s empty now, but the night that truck was stopped, it had about 150 barrels of oil in it.

So, if you have access to a tanker truck — and there are a lot of those around here these days — and you know how to connect it to an oil well, you can grab the oil. The next step: laundering the stuff.

Mike Peters said one way of doing that is to partner with the owner of a well that isn’t producing much oil.

“All of a sudden it becomes what we call a 'miracle well.' It will all of a sudden start producing 25, 50 barrels of oil a day, where before it didn’t produce anything," Peters said.

Another way is to team up with the operator of a disposal well.  Those are places where wastewater from oil production is pumped back underground. Disposal well operators make some of their money by skimming oil that’s left in the wastewater and selling it, kind of like owners of a junk yard legally resell scrap metal.

That's a legitimate part of their business, according to Peters.

But a crooked disposal well operator can slip a little stolen oil into the skim, and out comes freshly laundered crude. Even at thirty bucks a barrel, that makes a tidy sum when you’re talking hundreds or thousands of barrels.

So how big a problem is oil theft?

Credit Mose Buchele for KUT News
Oil producers are looking for new ways to combat oil theft, including lobbying for the ability to hire their own police.

“The standard answer to that, which comes out of the energy security council, is that it is probably between one to three percent of all the oil that comes out of Texas," Peters explained. 

That’s why oil companies are lobbying for higher penalties against oil thieves. They failed to get that signed by Gov. Greg Abbott last legislative session, but seem confident it will pass next session.  Probably more controversial is an idea to allow the industry to fund its own sworn law officers like ranchers and railroad companies do now.

As he pulls up next to the pickup truck he was following, it's clear Mike Peters thinks local law enforcement could use all the help it can get.

"Like I said, it’s probably purely legitimate," he said, writing down the license number of the Oklahoma plate. "But I’ll check on it and see what it comes back with later.”

As it turned out, the plates came back clean. But Peters said he was glad he checked, just for his own peace of mind. 

Mose Buchele focuses on energy and environmental reporting at KUT. Got a tip? Email him at Follow him on Twitter @mosebuchele.
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